On March 26, 2022, the Federal Law of the Russian Federation No. 67-FZ dated March 26, 2022 was published (comes into force from the day of its official publication). The Law amends the RF Tax Code.
The most important by the Law:
1. A special tax benefit for debt forgiveness has been introduced. It will be effective only in 2022.
Paragraph 1 of Article 251 of the RF Tax Code has been supplemented by subparagraph 21.5. It stipulates that starting from 01.01.2022 a debt forgiveness committed in 2022 for the loan agreements with a foreign organization (foreign citizen) signed before March 1, 2022 is not considered as a taxable income.
From the wording of subparagraph 21.5, it follows that the total amount of debt forgiven is not subject to taxation (the body of the loan and interest). There is also no tax on dividends (the debt cancellation is not equated to the payment of income, respectively, there are no grounds for reclassifying the forgiven interest into dividends). At the same time explanations of the controlling bodies regarding the application of the new tax benefit are not yet available.
It should be particularly noted that the application of the benefit does not require the participation of the lender and the borrower in each other's authorized capital.
The above-mentioned benefit also applies to claims assigned to a foreign organization (foreign citizen) before March 1, 2022. The Tax Code and Law 67-FZ do not clarify to which type of claims the exemption applies (whether it should be an assignment of claims under loan agreements or any debt, including those related to payment for goods). We are awaiting official clarifications on the subject.
Of course, the exemption only applies if the foreign creditor is ready to forgive the debt and draw up all the necessary documents: a notice or an agreement on debt forgiveness (we recommend a bilateral agreement, because it allows to settle all the important points).
Taxpayers that might be interested in the new tax benefit:
- Organizations which are planning liquidation in 2022 or subsequent years and at the same time have debts on loans to foreign lenders (they have an opportunity to write off the debt in 2022 without increasing the income-tax base);
- Organizations which are not planning liquidation, but have loan debts to foreign lenders that do not object to the forgiveness of such debts.
The new benefit applies to legal relationships that have arisen since January 1, 2022 (according to paragraph 4 of Article 5 of Law 67-FZ), that is, the forgiveness of debt that took place (committed) from January 1, 2022.
2. The second useful possibility established by the Law 67-FZ: companies are allowed now (without waiting until the end of the year) to change the method of paying corporate income tax and switch to the tax payment of advances from actual profit from the accounting period of “three months”, “four months” and so on.
If a company decides to change the tax payment procedure from the accounting period of three months, it must notify the tax office not later than 15 April. At the same time, a monthly payment may be made until April 28 (Government Decree No. 470 dated March 25, 2022). There is also an inconvenience: the company in this case will have to submit a tax return on a monthly basis. The order of filling in the income-tax return has not changed (Letter of the Federal Tax Service dated 25.03.2022, № SD-4-3/3626@). Also, the new tax payment procedure can only be applied after stipulating it in the tax accounting policy.
Taxpayers which might be interested in the new tax payment procedure: those companies whose profits have fallen sharply. They will be able to avoid paying advance income-tax payments.